Finding Text
Compliance Over Allowable Costs/Activities Allowed U.S. Department of Education Education Stabilization Fund ALN 84.425 Criteria: The award agreement governing ESSER requires that the School Board submit reimbursement requests supported by adequate documentation evidencing that costs claimed are allowed, allocable, and in compliance with terms and conditions of the federal award. Per 2 CFR 200.403, costs must be adequately documented to be allowable under federal awards. Condition: During our testing of Allowable Costs and Activities Allowed, we selected a sample of 77 transactions from ESSER’s population of expenditures for the year ended June 30, 2025. Of the 77 transactions, 2 instances were identified in which the School Board was unable to provide reimbursement requests to support the costs claimed under the program. The total dollar value of the unsupported transactions is $21,000. Cause: The School Board did not maintain adequate controls over the retention and organization of reimbursement request documentation supporting costs charged to the program. As a result, documentation necessary to demonstrate compliance with the award agreement’s reimbursement request requirements could not be located or provided to the auditors upon request. Effect: Without adequate documentation supporting reimbursement requests, the School Board cannot demonstrate that costs charged to ESSER are allowable under the terms and conditions of the federal award. This creates a risk that unallowable costs have been or may be claimed for federal reimbursement. The 2 unsupported transactions represent $21,000 in known questioned costs. Projecting the identified error rate of 2.6% (2 exceptions out of 77 transactions tested) to full program population results in approximately $63,000 in likely questioned costs, which may be subject to disallowance by the federal awarding agency. Recommendation: We recommend that management implement controls to ensure that all reimbursement requests submitted under federal award programs are retained in an organized manner and made readily available for audit. Management should also review the two reimbursement requests that could not be provided and attempt to obtain copies from internal records, the grant portal, or the applicable grantor/passthrough agency. If the reimbursement requests cannot be located, management should evaluate whether additional communication with the grantor or passthrough agency is necessary. Repeat Finding: No. View of Responsible Officials: Beginning with FY2026, a new Federal Programs Supervisor/Director was hired by the Board, and a Fiscal Administrator was appointed on August 27, 2025. These new designees will ensure that all federal programs operate within their allowable costs, activities, procurement, suspension and debarment guidelines. Approved budgets will be reviewed and complie with as purchases are made and reviewed monthly thereafter.